Online sales climbed 24% year over year, while Best Buy’s overall sales were flat.
The need for retail CEOs to keep a close eye on the future has never been more pronounced, because tomorrow’s retailing environment will be vastly different from today’s, thanks largely to the changes wrought by the Internet.
One of the most important aspects of the job of a CEO is to develop a vision for the future of the business, craft a strategy consistent with that vision, and set investment and operational priorities to turn that vision into a reality. That task sounds simple enough, but all too often CEOs get so caught up with the pressure of day-to-day operations or so obsessed with meeting today’s financial goals that they lose sight of the long-term direction of their industry. Their vision of the future becomes impaired by the demands of the present.
Such shortsightedness is dangerous and can easily become fatal for a business such as retailing, where consumer preferences change quickly and what’s in today is often out tomorrow. As we enter 2003, the need for retail CEOs to keep a close eye on the future has never been more pronounced, because tomorrow’s retailing environment will be vastly different from today’s, thanks largely to the changes wrought by the Internet.
In the holiday shopping season just completed, for example, online retail sales grew an estimated 35%, compared with store-based sales, which showed zero growth. True, web-based retailing accounts for less than 3% of all retail sales, but it is the direction that is noteworthy. And despite this robust growth, web-based retailing is significantly retarded by a host of factors. Security is still an issue and fraud rates for online purchases are four times greater than store-based transactions. High-speed and wireless connections to the web are still the exceptions to the dial-up rule. Designers of web-based retail systems are still in the early phases of their learning curve. Absent these and other restrictions, web-based sales might easily have doubled this past year. But fear not, the removal of these barriers is not a matter of whether but of when.
In the last year, too, major strides were made by retailers in their use of the Internet for marketing, collecting and analyzing customer data, supply chain and inventory management and for multi-channel integration. Indeed, the ease with which retailers can now coordinate their marketing, sales and fulfillment activities across multiple sales channels has ushered in a new era of multi-channel retailing. This month, our magazine adopts a new subtitle-Strategies for Multi-Channel Retailing-in recognition to the linchpin role that the Internet plays in this critical market shift.
Given such trends, it is hard to imagine a vision of the future of retailing that does not rest primarily on the Internet’s role in the business. A retail CEO who is not giving serious thought to the Internet’s impact on his or her business is not fulfilling the chief executive’s primary responsibility to define a vision of the future and plan for it.
As we look forward to our fifth year of publishing this magazine, we intend to redouble our efforts to inform retailers of the strategic implications of the Internet to all phases of their enterprise. Fully two-thirds of our subscribers are senior executives (SVP and above), and we believe they count on Internet Retailer to help them develop successful strategies to prosper in the multi-channel retail environment that is being defined by the Internet. We do not intend to let them down.
Best wishes for a happy, healthy and successful new year.